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Probably the most ambitious effort to reinvent risk management and insurance education is under way at Georgia State University's Robinson School of Business.

Since the launch of Georgia State's new initiative in 2003, the school has revised and realigned its undergraduate, graduate and executive education programs in what it describes as a "dramatic expansion and redirection of the department's research and academic programs toward a broad, integrated and quantitative vision of risk management."

However, the fundamental changes that are taking place in the role of risk management in the business world convinced Georgia State officials to "shift from a traditional focus on the insurance industry to a focus on the risk management function, and to treat insurance as a vehicle by which to manage risk," says Phillips.

"We see risk management as decision-making process that, at its roots, has the quantification of risk as one pillar and the other pillar being an economic or business-economic decision-making framework around making risky decisions."

The first phase took place between 2004 and 2006. It focused on the expansion in the size and scope of Georgia State's RMI program.

First, the university provided the RMI department with resources for additional hiring that would expand the RMI faculty by 25 percent. Taking into account compensating for attrition, "We have hired at least 10 new faculty over the last 3 years, and, of our tenured, research-active faculty today, 50 percent have come in since we started implementing the plan," says Phillips.

In addition to increasing the size of the faculty, the school also expanded its range of skill sets and academic specialties.

"Prior to 2004, we were all focused on insurance," says Phillips. "Today, we have faculty members who focus on mathematical finance, dynamic macroeconomics and contract theory, particularly dealing with the microeconomics of how contracts are traded back and forth between parties and how you write those contracts to minimize the risk exposures that you have."

Once its new and expanded faculty was in place, Georgia State then began to make changes in curricula and programs, with initial emphasis on the Ph.D. and master's levels.

"We have 100 percent changed the Ph.D. program and have made significant changes in graduate-level programs," says Phillips.

These changes include:

-- A new risk management and finance dual-concentration in the Georgia State M.B.A. program.

-- A new graduate program in mathematical risk management that is similar to financial engineering programs offered at other schools, but which focuses on the management of financial risk and rare events within capital markets.

-- Expansion of the quantitative finance components in Georgia State's actuarial science program.

These shifts in curricula have begun to produce shifts in the types of jobs for which Georgia States RMI graduates are being hired.

"In our traditional labor markets, our students are going out at higher salaries, and we also are placing them with employers with which we did not place students before," says Phillips.

One example, says Phillips, is that "we placed a student in a big packaging company, in their finance and quantitative strategy group. This group supplements the traditional capital budgeting that the company performs, but makes decisions that are risk-focused. This involves not only traditional capital budgeting, but also doing the risk analytics around that as well."

The broader background that students get in the new Georgia State programs means that "they are ideally situated because they not only have the background in business economics and business decision-making, but they also have strong analytics skills focused around that risk management function," says Phillips.

"This is the direction in which a lot of companies will be headed."

April 15, 2008

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